The Star's source blames a Madoff-linked firm for a fund-raising fiasco, disappears

1. A newspaper that accurately quotes someone saying something that is almost certainly complete b.s. about a third party has:

A. Done its job.

B. Done a bad thing.

C. Earned an honorable mention from the American Stenographic Society.

D. Put itself in a spot where it might later have to clarify the record.

2. Accurately quoting the third party denying the thing said about it and claiming it knows nothing about the outfit that is talking about it:

A. Solves the newspaper’s problem.

B. Is an occasion for reflection.

C. Further enhances stenography credentials.

3. Running with the allegation after the sole source cannot be reached a second time and his organization leaves a message on an answering machine saying it has suspended operations due to an “extreme situation” is:

A. Wise.

B. Unwise.

C. Neither.

D. Both.

4. Declining to correct the record after a famous financial newspaper, which had run a similar story, publishes a correction on its story the size of a softball:

A. Is a sign of steadfastness.

B. Is a sign of stubbornness.

C. Is another occasion for reflection.

D. Is why all newspapers should be wiped from the face of the earth for all time.

This is not the biggest deal in the world, but the Ventura County Star, an E.W. Scripps Co. paper in Camarillo, California, ran a story under the headline “Madoff fallout cancels local folks’ D.C. trip,” reporting that residents had bought packages to the Obama inaugural from a Chicago charity, known as December Rain, but later learned that the charity had shut down and that they were out of luck.

The trouble is Madoff almost certainly had nothing to do with the local folks’ losing their tickets. The only support for the claim was the word of a person who was actually caught reneging on his promise to provide tickets and then disappeared.

The story starts this way:

At least four Ventura County residents and about two dozen others nationwide have lost out on inauguration packages in Washington, D.C.

The deals they purchased were supposed to include tickets to President-elect Barack Obama’s swearing-in ceremony and a chance to meet Obama.

Okay, so far (the text, anyway, not the headline, which we’ll get to). But before dropping out of sight, the Chicago charity told the Star that it was the victim of the Madoff scandal, specifically one of Madoff’s so-called feeder funds, which collected money from investors and invested with Madoff (the emphasis is mine).

But they have been snagged in a bizarre web involving a New York investment firm said to be reeling under the weight of the Bernard Madoff financial scandal and a Chicago-based children’s charity, which announced Friday it has temporarily shut down.

Then the feeder fund is named:

December Rain said it purchased the packages through Fairfield Greenwich Group, a New York investment firm that is said to have direct ties to Madoff’s securities firm. The Wall Street Journal has reported that Fairfield Greenwich appears to be the biggest casualty in Madoff’s alleged $50 billion Ponzi scheme

December Rain Executive Director Paul Saulnier was critical of Fairfield Greenwich in an interview earlier this week, saying he never received the promised ticket packages.

Hmm. In the next paragraph, Fairfield Greenwich is allowed this statement:

But when contacted for a response, Fairfield Greenwich said in a terse statement late Thursday that it “has never heard of this charity, nor have we ever worked with this charity. ”

A jump ball, you say? No way.

Think about it: That means anybody gets to say anything about anybody as long as the second party is quoted denying it. It requires the second party to prove a negative: how do you prove you did not offer to obtain tickets to the presidential inaugural on behalf of some charity? How do you prove you didn’t do a lot of things? There’s no alibi for this.

Besides, the next paragraph should make a newspaper nervous:

A call to Saulnier at his Chicago office Friday netted only a short recording: “December Rain has currently suspended operations while we address the extreme situation and matters that have arisen from the cancellation of planned events. We apologize for the temporary closure. December Rain will continue to resolve these issues and hopes to be back in operation shortly.”

Hmm. No call back from the source. Not liking that.

The story returns to quoting Saulnier talking about Fairfield Greenwich:

Saulnier, who was upset during the interview, added: “It’s like a house of cards over at Fairfield Greenwich. I can’t get phone calls returned. It’s been devastating.”

And

Saulnier said he contacted the New York State Attorney General’s Office and was told officials there couldn’t help him because it’s a civil matter. He added that it may take weeks to sort out the mess.

Now, there is no sympathy here at The Audit for Fairfield Greenwich. We leave them to their fate, which will not be pretty.

But that obviously isn’t the point here. Not everything is Madoff-related just because someone says it is.

And there are a few things that qualify as red flags that appeared before publication. First, this is a minor point, but the New York AG handles civil matters all the time, so Saulnier is mixed-up there, at best.

Second, the story says the packages to an inaugural were sold in February, back when the nominations were still going on. Is that possible? Sure. Are such packages actually sold before the election? No.

(The text of the story actually says the tickets were sold to an Obama inaugural, including a meeting with Obama, which would have made the story of the packages preposterous on its face. Can you imagine the uproar if it were learned that Obama was selling tickets to his inaugural before the primary was even over? However, Joe Howry, the Star’s editor, who will get his full say in a moment, tells me that the reporting found that the tickets were actually sold as passes to a generic presidential inaugural. He says that in writing the story the paper “updated” the information to name Obama. A poor writing decision, to be sure, but that’s not the issue here. The question is how fishy were these “passes” before the story was published. Answer: pretty fishy, but not utterly out of the question.)

Third, the whole thing sounds a little convoluted—buying inaugural tickers in February from a charity that said it got them from a investment firm because…why?

Fourth, the accuser is not calling back and has “suspended” his operation.

Things get hairier when The Wall Street Journal two days later, on January 20, runs a similar story, more or less a lighthearted feature, that says PETA, the animal-rights group, complained that it, too, was a “far-flung” victim of the Madoff scandal, having bought its package from December Rain.

Called by the Journal, Saulnier this time said he had given the inauguration money not to Fairfield Greenwich itself but to unnamed investors in the feeder fund who had lost money when the dominos fell.

Still, even though the firm itself wasn’t named as being directly involved, the Journal—to its credit—soon ran an unusually detailed correction:

Corrections & Amplifications
Investment firm Fairfield Greenwich Group said it hasn’t had any dealings with a Chicago-based charity called December Rain. A Jan. 20 Deals & Deal Makers article said that investors of the firm sold inaugural-event tickets to December Rain, but the Journal didn’t reach any Fairfield Greenwich investors or the firm for comment before the article was published. The Journal can’t verify that December Rain paid investors, whom the charity declined to name, for the tickets. December Rain did auction off what it said were inaugural tickets and promised winners access to inaugural events sponsored by political organizations and lobbying groups. However, some of those organizations, including the Democratic National Committee, the American Medical Association and the Pharmaceutical Research and Manufacturers of America, deny that they held the events promoted by December Rain. Paul Saulnier, the executive director of December Rain, whom the Journal incorrectly identified as Philip Schein in the article, said Tuesday that he stepped down from the organization. He didn’t return calls and emails Wednesday, and he didn’t put the Journal in touch with his lawyer, as he offered.

The reason? The support for the assertion that Fairfield Greenwich was in any way involved rested on Saulnier alone, and other claims he made could not be independently verified. His refusal to return phone calls impaired whatever credibility he may have had, considering, remember, that he was the one who reneged on the bargain.

Fairfield Greenwich’s connection to December Rain disappeared with Saulnier.

For his part, Howry, the Star’s’s editor, defends his paper’s decision-making in publishing and in declining to run a correction.

He says that in reporting the story, the paper was mediating between competing claims, as newspapers often do, and that the proper course was to include all the known facts and let both sides have their say.

“We’re sitting here in limbo, trying to report it as best we can,” he says. “You can only go so far.”

Upon hearing Saulnier’s accusation, Howry said, the paper did all its could to vet December Rain, including pulling its public tax records, and found nothing untoward. He said the paper took the extra step of holding the story for a day and a half while waiting for a response from Fairfield Greenwich, which issued a two-sentence statement, but provided no background or context.

“Had December Rain had a spotty past, had we found problems, would we have gone ahead? Heaven sakes, no,” Howry says.

He says that by reporting that Saulnier couldn’t later be reached and that his group had suspended operations, the paper gave readers enough information to decide whom between the two sides to believe.

“A reasonable person would assume that with Fairfield Greenwich’s denial, and suddenly this guy disappeared, who are you going to think is the guilty party?” he says.

He says the Star and the Journal faced different situations since the Journal never called Fairfield Greenwich, and the Star did.

Still, Howy concedes that the headline is wrong. “There should probably be a clarification in terms of that headline. In terms of the text, there’s nothing to correct there.”

He says the story is not over, and that the paper is still trying to find out the truth.

“It continues to unfold, you continue to try to find the truth, and you try to do it as honestly as you can,” he says. “With any daily newspaper. If we had to nail everything down to the last detail, we’d never have anything to print.”

December Rain’s phone still has the same message, though its website is up and running
including the page that takes your credit card for donations. I’d say hold off on that.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Don't Miss

In June 2003, the San Francisco company Linden Labs launched a Massively Multiplayer Online Role Playing Game called Second Life. It quickly grew to over a million users, and has become a touchstone for the potential social adoption...